Thursday, May 17, 2012

out of the megastore and into the parking lot

That's the journey of a former Ikea worker in Spain, who used to deliver and assemble furniture for the mega furniture retailer but now does the same thing as part of the informal economy, offering his services to people who exit the big box store. He was laid off by the massive retailer, and now makes half as much as he used to earn, but it's off the books.

Flea markets are flourishing, too. Patricia Aragon Llamas, 31, shows up
every weekend at the Charco de la Pava market to earn about €50 selling
second-hand clothing and shoes.“This market has doubled in size in the past year,” she said. “I’ve got a
3-year-old child and an unemployed husband, so I’m really beyond
thinking about what’s legal or not, as long as it brings in a bit more
money.”

According to The International Herald Tribune, the amount of tax money the Spanish government may be losing to System D could amount to €37 billion -- or $47 billion US.

But that shouldn't be the major concern. People's survival should be. As I reported a few weeks back, Spain has turned into Europe's developing world economy, with an economic outlook that is worse than Nigeria's. Now the official world is recognizing the fact.

“Without the underground economy, we would be in a situation of probably
violent social unrest,” Robert Tornabell, a professor and former
dean of the Esade business school in Barcelona, told the IHT. “A lot of people are now
staying afloat only thanks to the underground economy, as well as the
support of their family network.”

Another professor who has studied the parallel economy in Spain suggests that the government needs to work with it: “Much of the informal economy is nothing but the normal reaction of
low-skilled people who have no alternative once they lose their job,” said Michele Boldrin, an economics professor at Washington University in
Saint Louis, Missouri, who co-authored a study in May on Spain’s
underground economy on behalf of Fedea, an economic research group in
Madrid. “What the government should focus on is reforming the formal
economy to make it more efficient and competitive rather than focus on
pursuing such people.”

But the people in the IHT article are not necessarily low-skilled. And reforming the economy takes a stimulus, not austerity. In the absence of sensible government, System D is the way forward. If the people will lead, the leaders must follow.

About Me

I spent most of the past four years hanging out with street hawkers, smugglers, and sub-rosa import/export firms to write Stealth of Nations, a book that chronicles the global growth of System D--the parallel economic arena that today accounts for half the jobs on the planet.
Prior to that, I lived in squatter communities across four continents to write Shadow Cities, a book that attempts to humanize these vibrant, energetic, and horribly misunderstood communities.
My articles on cities, politics, and economic issues have appeared in many publications, including Harper's, Scientific American, Forbes, Fortune, The Nation, The New York Times, The Washington Post, Metropolis, and City Limits. Before becoming a reporter, I worked as a community organizer and studied philosophy. I live in New York City and do most of my writing on manual typewriters.